An unexpected hike in the cost of giving Kansas state employees a raise has created a potential budget crisis next year that could cause state agencies to shut down some operations.
The cost for the 5% raises came in $11 million more than originally expected and cost more than what the Kansas Legislature approved. That may seem small in comparison to the multi-billion dollar state budget, but it might create cash flow problems for government agencies.
That extra cost means state agencies will pay for the raises themselves, but they may need to use other funds in their budgets to cover it until lawmakers provide more funding. That could make things difficult in the second half of the 2024 fiscal year — next spring — if lawmakers wait too long to cover the costs.
Kansas officials this week said lawmakers will need to immediately address a budget shortfall when they convene for the 2024 legislative session in January or possibly risk some state agencies shutting down.
Adam Proffitt, the state budget director, said if lawmakers don’t address the issue, some of the agencies could run out of cash to pay their employees. He likened the issue to a scaled-down version of the debit limit crisis that the federal government just faced.
“The longer it goes into session without a solution,” Proffitt said, “the more risk there is for agencies from a cash flow perspective.”
Before adjourning for the year, lawmakers in April allocated $120 million in the state budget to raise salaries for most state employees, and $46 million of that funding comes from the state’s general fund. However, an updated calculation of the money needed for the raises shows the funding was about $11 million short.
House Speaker Dan Hawkins said the Republican-controlled Legislature is committed to adding the additional funding when they return next spring.
“That will be one of our first priorities when we get back,” Hawkins said. “It’s not going to be hard to get done.”
The raises to state employees are based on a workforce study that showed most Kansas government workers were paid below average market rates.
According to the Kansas Reflector, the state payment plan offers most employees a 5% raise. Some agencies, like the Department of Corrections and state hospitals, also received additional salary adjustments based on the market survey.
Lawmakers gave the Kansas Highway Patrol and Kansas Bureau of Investigation 2.5%, and handed state universities $13 million to distribute through merit raises.
Dylan Lysen reports on politics for the Kansas News Service. You can follow him on Twitter @DylanLysen or email him at dlysen (at) kcur (dot) org.
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